Fuel tax will drive up Aucklanders' costs of living, hit businesses in the pocket

Rising costs would have to be passed on to consumers. Photo / Sarah Ivey

A proposed fuel tax is predicted to drive up Aucklanders' living costs in more ways than one, hiking up the cost of goods and services as well as individual petrol bills.

A regional fuel tax set out in Mayor Phil Goff's proposed 10-year budget would add 10c a litre plus GST to fuel - taking the cost for motorists to 11.5c.

The tax, which had been agreed to by Government, would raise $130 million to $150m towards easing congestion, improving the housing crisis and reducing sewage pouring into the region's harbours.

It would also allow Goff to remove an interim transport levy of $114 set three years ago, set a general rates increase of 2.5 per cent and introduce targeted rates on improving water quality.

At today's governing body meeting where Goff is tabling his draft budget, the mayor said Aucklanders prefer a regional petrol tax to other options for extra revenue, including a general rates increase, tolling and selling strategic assets.

But Aucklanders are slamming Auckland Council for imposing a "tax upon a tax" and Auckland Regional Chamber of Commerce and Industry chief executive Michael Barnett said he would "absolutely" expect to see a blanket increase of goods across the city.

He said the cost would considerably affect the average small to medium-sized business, costing them between $150 and $200 extra a week. This would likely be passed on, and consumers wouldn't be chuffed about it.

"I think businesses will survive. It's going to be about getting consumers to accept that costs are going to rise. There's going to have to be really good communication," he said.

"If anyone tries to swallow that cost, it's going to be really dangerous."

Barnett said he had concerns around transparency. Aucklanders deserved to know where the money would go and have access to more detail - especially around whether the cost increase would apply to diesel.

"If it's going to be on diesel then it's going to have a big impact on the distribution of goods.

"One of the main trucking companies I've spoken to said they would probably look to buy around 50 per cent of their fuel outside of Auckland to lessen the impact for their consumers."

The managing director of an Auckland-based trucking company said the fuel tax would have a major impact on business, because the amount of travel workers do.

The director, who didn't want to be named, said he did expect a fair amount of pushback but businesses would have to pass on cost increases to consumers to survive.

"I would suggest that they would have to, I mean it's not a short-term cost."

"It's a double-edged sword - if it's going to be used to ease congestion then that would be fantastic. Our guys are sitting around in congestion every day. But for now consumers will have to pay the difference," he said.

Although he wasn't opposed to the idea of a tax, he said there needed to be public discussion about specific projects the money would fund.

"I'd like to see it ring-fenced in the public forum, we need to see where the money is going to go."

David Aitken from National Road Carriers said the tax would hit his business but agreed that this spike would "obviously" be passed on to the businesses they contract to.

"The margins in transport are very low - it's a very competitive sector. So transport costs need to be passed on to the consumer if companies are going to survive."